Nearly $100 Billion Stolen From Covid Relief

Nearly $100 Billion Stolen From Covid Relief

U.S. President Joe Biden speaks about the country's fight against COVID-19, in Washington
KEVIN LAMARQUE
By Yuval Rosenberg and Michael Rainey
Tuesday, December 21, 2021
Good Tuesday evening! Or not on top of everything else, now there's a candy cane shortage?
Biden Says He’s Still Going to ‘Get Something Done’ With Manchin

President Biden on Tuesday held out hope that Democrats could still pass his Build Back Better plan of social spending and climate programs even after Sen. Joe Manchin (D-WV), a key centrist vote in the Senate, announced Sunday he is a "no" on the legislation.

Asked whether Manchin went back on his word and how he can rebuild trust among the divided members of his own party, Biden told reporters he doesn’t hold a grudge.

"I want to get things done. I still think there’s a possibility of getting build Back Better done," Biden said in remarks from the White House after announcing steps to address the latest surge of Covid-19 cases, fueled by the rapid spread of the omicron variant. "Senator Manchin and I are going to get something done," he said.

Biden went on the defend his bill against charges that it would increase inflation and hurt the economy, citing the Goldman Sachs analysis we mentioned yesterday that said GDP growth would be lower next year without the legislation. That same analysis projected that inflation will remain high well into next year, making passage of the Democratic plan more difficult.

While Biden signaled an openness to working with Manchin, other Democrats, still irate over the West Virginia senator’s torpedoing their agenda, reportedly are looking to ramp up the pressure on him. "Senate Democrats are signaling they plan to take more of a hardball approach," The Hill’s Alexander Bolton reports. "Democrats are threatening to drive a wedge between Manchin and his many lower-income constituents who stand to reap billions of dollars in federal benefits if Build Back Better passes, including an enhanced child tax credit, lower Medicare-negotiated prescription drug prices and subsidies to cover the cost of child care."

Manchin has bristled against such pressure tactics, and Democrats have been wary of squeezing Manchin, fearing that it could backfire.

A progressive proposal for Manchin: As the White House tries to find a path forward, it must also contend with progressives still fuming over what they see as a betrayal by Manchin and in no mood to try to further appease him. "It is abundantly clear that we cannot trust what Sen. Manchin says," Rep. Pramila Jayapal (D-WA), chair of the Congressional Progressive Caucus told reporters Monday. "No one should think that we are going to be satisfied with an even smaller package that leaves people behind or refuses to tackle critical issues like climate change."

That could complicate Biden’s path to "getting something done," as he put it. "Whether liberals’ public pronouncements that they are done scaling back their priorities is just pique talking or a firm decision will be just as key to what the party can accomplish as whether Manchin comes back to the negotiating table," writes The Washington Post’s Marianna Sotomayor.

Jayapal on Monday suggested that Biden enact some of his agenda via executive actions — a path many Democrats reportedly doubt could be effective. On Tuesday, though, Jayapal floated another suggestion, one aimed at pinning down just what Manchin can and can’t support.

Washington Post columnist Greg Sargent says Jayapal told him she reached out to Manchin Tuesday morning and asked him to go back to the Build Back Better framework released by the White House three months ago. That plan called for a one-year extension of the expanded child tax credit, boosting Obamacare subsidies for four years, funding universal pre-K for six years and other measures.

"Jayapal told me she asked Manchin to take that framework and line it up next to the BBB that passed the House (which Manchin has rejected)," Sargent writes. "She asked him to say what, specifically, in the House bill doesn’t match up with what Manchin did commit to in the framework (in his discussions with Biden), and to say what specifically in the framework he did not commit to and does not support."

In other words, Jayapal seems open to at least discussing ways in which the House-passed plan might be reconfigured — and intent on trying to decipher just what Manchin wants. "Another possibility, Jayapal suggested, might be for Senate Democrats to hold votes on each item, to get Manchin to commit one way or the other," Sargent adds. "That could lead to an endgame in which a stripped down BBB is negotiated."

Jayapal said she’s "not quite there yet" on the idea of a bill that only includes a few programs and funds them fully for 10 years, an approach that would inevitably lead to some progressive priorities being excluded. But she acknowledged that Democrats will still need to win over Manchin: "We all understand that we need 50 votes, and he’s our 50th vote."

The bottom line: Senate Democrats are set to hold a virtual caucus meeting tonight to discuss their path forward on both this bill and a voting rights measure. As of Tuesday morning, it wasn’t clear whether Manchin would participate. What is clear: Biden’s goal of reviving some version of Build Back Better won’t be easy.

Manchin Isn’t Buying Dems' New Thinking on Debt

In explaining his opposition to the House-passed version of the Build Back Better bill, Manchin has repeatedly cited his concerns about inflation and the national debt. We mentioned yesterday that economists for the most part have concluded that the bill would not produce a spike in inflation. Today, Bloomberg’s Mike Dorning takes a look at Manchin’s other major concern, writing that Manchin hasn’t bought into the Biden’s administration’s efforts to "reframe" thinking around the debt given low interest rates and shifts in mainstream economic views:

"Biden and his team more broadly have tried to get Congress to assess what’s affordable by talking about the debt payments the government is actually making -- much as a homebuyer or private business might.
"‘The world has changed,’ Treasury Secretary Janet Yellen told the Senate in her confirmation hearing at the start of the year. ‘In a very low interest-rate environment like we’re in, what we’re seeing is that even though the amount of debt relative to the economy has gone up, the interest burden hasn’t.’ …
"But Manchin isn’t buying the argument. In a statement explaining his reasons for rejecting legislation enacting Biden’s economic agenda, he highlighted the ‘staggering’ debt the U.S. already has accumulated. …"

Read more at Bloomberg News.

Chart of the Day: Child Tax Credits

Manchin’s scuttling of the Build Back Better bill means that the refundable child tax credits that were created by the American Rescue Plan last March will expire at the end of December, instead of being extended for one more year. Manchin has criticized the tax credit program publicly, citing its cost, lack of work requirements and relatively high income threshold. In private comments, Manchin has reportedly said that he thinks some West Virginia families will use the child credit payments to buy drugs rather than to help their children.

However close to reality such that view may or may not be, data from the U.S. Census Bureau, summarized in this chart from Bloomberg News, show that the number one use of the tax credit payments is for food, followed by utility bills, rent and clothing. Other common uses for the funds include education costs, debt reduction and child care.

According to an analysis from the liberal Center on Budget and Policy Priorities, nearly 10 million children are at risk of slipping back into poverty in the absence of the payments, which helped cut child poverty by roughly 40% this year.

Nearly $100 Billion Stolen From Covid Relief

Fraudsters have stolen close to $100 billion in Covid-19 relief funds, the U.S. Secret Service said Tuesday.

Much of the fraudulent activity has been directed at the trillions of dollars provided by Congress to help businesses and individuals survive financially during the pandemic.

"While fraud related to personal protective equipment (PPE) was of primary concern to law enforcement, including the Secret Service, early in the pandemic, the release of federal funding through the Coronavirus Aid, Relief and Economic Security (CARES) Act has attracted the attention of individuals and organized criminal networks worldwide," the agency said in a statement announcing the appointment of a new national pandemic fraud recovery coordinator.

Specific programs that have been targeted by an array of criminals include the Paycheck Protection Program, the Economic Injury Disaster Loan program and the Pandemic Unemployment Assistance program.

Roy Dotson, the new fraud recovery coordinator, said the agency currently has more than 900 active criminal investigations into relief fund fraud. "It’s a wide range because the pot was so big," Dotson told CNBC. "You not only have your typical transnational organized groups and domestic organized groups, criminal groups, but you have individuals that decided to take advantage of that."

The agency said that it had recovered about $2.3 billion so far and arrested more than 100 people. "I’ve been in law enforcement for over 29 years and worked some complex fraud investigations for 20 plus years, and I’ve never seen something at this scale," Dotson said.

News

Views and Analysis